This week, the U.S. Court of Appeals for the Ninth Circuit ruled that there is no cause of action for contributory cybersquatting under the Anticybersquatting Consumer Protection Act ("ACPA"), 15 U.S.C. § 1125(d). See Petroliam Nasional Berhad (Petronas) vs. GoDaddy.com, Inc., No. 12-15584 (December 4, 2013). (A copy of the full opinion is available here.)

The plaintiff-appellant, Petroliam Nasional Berhad, is a Malaysian oil and gas company, which owns the trademark “PETRONAS.”  After discovering that a third-party had registered the domain names Petronastower.net and Petronastowers.net, and was using GoDaddy’s domain name forwarding service to redirect traffic from those sites to an adult content web site, “camfunchat.com,” the PETRONAS subsidiary responsible for ferretting out potential trademark infringement sent a take-down letter to GoDaddy.  When GoDaddy refused to take action against the claimed cybersquatting, PETRONAS sued GoDaddy in the United States District for the Northern District of California on a number of theories, including cybersquatting and contributory cybersquatter under 15 USC § 1125(d). After limited discovery to clarify the extent of GoDaddy’s activities as to the domain names, the District Court granted summary judgment in favor of GoDaddy.  PETRONAS appealed to the Ninth Circuit with respect to its claim of contributory cybersquatting. 

After reviewing the facts and the Act, the Ninth Circuit concluded that the plain text of ACPA does not provide a cause of action for contributory cybersquatting, nor would permitting one further the Act’s goals.  Rather, it held that limiting claims under the Act to direct liability was consistent with ACPA’s goal of ensuring that trademark holders can acquire and use domain names without having to pay ransom money to cybersquatters.  The Court noted that direct cybersquatting requires subjective bad faith and that focusing on direct liability spares neutral third-party service providers such as GoDaddy from having to “divine the intent of their customers,” – a nearly impossible task that would require service providers to inject themselves into trademark and domain name disputes.

In reaching this conclusion, the Ninth Circuit noted that some district courts had recognized the cause of action for contributory liability and held a registrar liable when plaintiffs could show “exceptional circumstances.”  The Court dismissed that approach, observing that such an “exceptional circumstances” test has no basis in either ACPA or in the common law of trademark.  The Court said that such cases were merely an “attempt to cabin a judicially discovered cause of action for contributory cybersquatting with a limitation created out of whole cloth,” – something it refused to do.

The PETRONAS ruling should provide much comfort to registrars sued for contributory cybersquatting in the Ninth Circuit.  Time, however, will tell if other Circuits will follow this decision and construe ACPA similarly.

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